- Title: Cuba says economy shrank this year in wake of Venezuela crisis
- Date: 27th December 2016
- Summary: HAVANA, CUBA (FILE - OCTOBER 2016) (REUTERS) CLASSIC CARS USED FOR TOURISTS PARKED OUTSIDE THE OLD CAPITOL BUILDING TOURISTS GATHERED WITH A PHOTOGRAPHER WITH AN OLD-STYLE CAMERA VARIOUS OF TOURISTS DINING AT A PRIVATE RESTAURANT PEOPLE WALKING THROUGH A CROWDED STREET AMERICAN AND CUBAN FLAGS HANGING FROM THE WINDSHIELD OF A CAR TOURISTS ON AN OPEN-TOP TOUR BUS VARIOUS EXTERIORS OF THE HOTEL INGLATERRA IN DOWNTOWN HAVANA
- Embargoed: 11th January 2017 20:49
- Keywords: Cuba economy Venezuela tourism Ricardo Cabrisas Raul Castro contraction
- Location: HAVANA, CUBA
- City: HAVANA, CUBA
- Country: Cuba
- Topics: Government/Politics
- Reuters ID: LVA0025ENSPQB
- Aspect Ratio: 16:9
- Story Text: EDITORS PLEASE NOTE: EDIT CONTAINS MATERIAL WHICH WAS ORIGINALLY 4:3
Cuba's economy shrank 0.9 percent this year in tandem with the crisis in its key trading partner Venezuela, its economy minister told the National Assembly on Tuesday (December 27) though he predicted a slightly brighter outlook for 2017.
The figure suggests the island nation's economy contracted sharply in the second half of 2016 after the cash-strapped government drastically cut imports, investment and fuel in response to a drop in exports and cheap oil deliveries from Venezuela.
It had reported 1 percent growth for the first half.
"The evaluation of the estimated economic performance for 2016 and the outlook for 2017, confirm the tense situation given the availability of foreign funds, the missing of foreseen income from the export plan and sharp limitations in the fuel supply which put us in a situation that cannot be reversed in the short-term (and which is) characterized by strong restrictions which necessitate a deep analysis and prioritized attention to the issues facing the national economy," Economy Minister Ricardo Cabrisas told the National Assembly.
In excerpts published by official media, Cabrisas gave a brighter outlook for next year, forecasting strong growth for the sugar industry and tourism.
"For 2017, we expect growth of 2 percent in gross domestic product following a contraction of 0.9 percent in 2016," Cabrisas was quoted as saying by official media.
Cuba's centrally-planned economy has struggled for decades with the U.S. economic embargo and mismanagement at home.
Market-style reforms and, more recently, a detente with the United States that has boosted remittances and the tourism sector, helped the economy grow on average 2.3 percent each year between 2011 and 2014 and 4 percent in 2015.
Still, the long slump in global fuel prices is hurting many of Cuba's top trading partners such as Angola, Venezuela and Brazil and revenue from the sale of professional services to those countries dropped this year.
Key ally Venezuela has slashed its provision of cheap oil and the drop in global commodities prices is punishing Cuban exports of nickel, refined oil products and sugar.
Cabrisas said one area that could be improved was foreign investment, which remained low despite government plans for it to become a crucial growth driver.
Since approving a law to bolster foreign investment more than two years ago, Cuba has approved just $1.3 billion worth of projects. It aims to take in $2 billion annually.
"The plan we present to the Assembly today is tense and not without risks, with efforts already underway which still need to be defined, but we believe we can achieve it," Cabrisas added.
Some experts fear growth from thawing relations with the United States may be at risk since Republican Donald Trump's victory in the U.S. presidential election.
Trump, who takes office Jan. 20, has vowed to "terminate" Obama's engagement with Cuba unless Havana gives the United States what he calls a "better deal."
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